Changjiang Securities Week Strategy: After Struggling, The Market Will Continue To Bottom Down.

Weekly market review

In the first week of June, only the computer industry realized a net inflow of funds. The basic reason is the support of policy expectations.

The relatively low volume of net outflow is brokers and pharmaceuticals. The top three of net outflows are chemical fiber, coal, oil and machinery.

As we suggested in the previous week's strategy, the pressure on the cyclical sector is emerging again.

On the conceptual plate, the Internet of things has become the only concept of capital inflow. The Shanghai and Shenzhen 300 heavyweights have become the two largest capital outflow.

From the rise and fall, Shen Wan index dropped 3.71%, while the small cap index fell by only 0.37%.

The divergence of large and small plates also made the small cap stocks a new premium relative to the premium of large cap stocks.

In the stage of overall valuation downtrend, small cap stocks may face adjustment pressure.

Important policy and information review last week

In May, the PMI index was 53.9. According to our analysis of sub indicators, the decline in May is not only a reflection of seasonal factors. Although there has been a general decline in the same period in May, based on our understanding of the short term prosperity of the recovery period and the changes in the back stocks, the decline is likely to be a sign of the slowdown in manufacturing expansion. The 2 quarter may be a growth point.

This will be confirmed by the value added of the manufacturing industry.

One week strategy view: after struggling, the market will continue to bottom down.

The market game will continue, and the struggle will continue. But the bottom of the valuation market does not have much support.

After the struggle after the rebound, the market continued to choose bottom down or the probability event.

Although the real estate industry chain has certain advantages in valuation, short term large net outflow of funds shows that the trend of next week is still not optimistic.

We still recommend financial insurance with undervalued value, and defensive food and beverage industry, bio medicine industry that is boosted by bio industry development plan, agriculture, forestry, livestock and fishery industries with inflation benefits and utilities industry with the expected water price increase.

Important industry viewpoint

At present, the real estate policy that has far-reaching impact on the market has not changed. The two apartments have been promulgated, and the tax collection has been intensified. The market regulation will continue.

Market prices should change when the 3 - quarter supply peak is coming.

While we are concerned about the direction of the real estate policy, we have put more emphasis on the undervaluation and defensive nature of the June allocation.

This week we will also outline the basic situation of major defensive industries and the specific investment strategy in June.